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The digital economy contributed $79 billion to the Australian economy in 2013/14, representing 5.1% of Australia’s gross domestic product, while 22% of employees now work intensively with ICT, according to a new Deloitte Access Economics report.

Start-up lessons from a returning ad man

Thirteen years after launching multi-national ad agency Archibald Ingall Stretton, Stuart Archibald has sold-up and returned home to Sydney.

As he prepares for his next venture, we chatted to Archibald about what start-up lessons he learned on the road.

Archibald is sitting at a concourse cafe in Sydney’s bustling Strand Arcade, near a gentlemen’s outfitters from which he’s just emerged.

The backdrop gives an appropriate context: Archibald is preparing for business.

“I’m going to do another start-up. It’s as simple as that,” he says.

“Building on what I’ve learned in London over 13 years doing that start-up, developing it, taking it international into Europe, America, New York. It’s time to do it all again.”

Reflecting on London-headquartered Archibald Ingall Stretton – the direct and digital agency he co-founded in 1998 – the most salient points for Archibald seem to involve the agency’s beginnings, and waving goodbye earlier this year.

He says: “We started up as three guys in a room.”

“We didn’t have a founding client, or the money to form the business, plus we wanted to continue to pull a wage.”

“The more you give away early on, the less you have if you ever sell the business, or autonomy and so on.”

“If you want money up-front you have to realise it can affect you later on, that’s one learning.”

After talking to potential investors, Archibald and his partners ultimately struck a deal that saw French holding company Havas take a minority share in their business.

In return the agency received funding that helped it get off the ground quickly.

“It’s this double-edged sword of ‘No support, you’re out on your own and all the hard things that go along with it’, or ‘Give away a bit early on, some autonomy, in exchange for the benefits of an easier life’,” he says.

“When you’re doing a start-up you’ve got to have the vision early on: ‘What do we want to do?’ Where do we want to be in five years’ time? Ten years’ time?”

Archibald adds: “Have a clear vision about what you want to do, and decide carefully about which investor you want to go with you.”

“Who are they? What are they about? Are they going to be breathing down your neck?”

“A reason we went with Havas was they were very autonomous – they let you get on with setting up the business.”

Having a long-term vision sounds like an especially handy advantage for communications agencies in Australia; a market where independents are few and far between.

And a clear vision is also something Archibald points to as valuable for start-ups during the key stages of growth – be it those crucial first few hires or, later on, when the need comes to rapidly staff-up as the business expands.

If staff are going to put as much in as the business founders “you can’t walk around your office imparting on people ‘It’s my mortgage on the line here’ and all that, because you’ll only scare people,” he says.

“You have to give them the vision: what are you trying to do day in, day out? And the bigger you get, you have to reaffirm that vision.”

Where to start in NYC

Founded as a direct marketing agency, AIS was relatively fast to embrace digital.

Notable early new business wins, such as Skoda and Virgin Net, helped put the agency on the radar.

Then giant UK telco O2 consolidated the arrangements it had with multiple agencies into just one by moving to AIS during 2003. In the process, the agency doubled in size.

The next big phase for AIS was to go international – an expansion Archibald himself spearheaded.

And it’s after spending the past two years setting up AIS in New York that he finds himself back home in Sydney.

Archibald says start-ups from any industry with aspirations to open in New York or London should note the investment trends of large businesses.

“If a start-up agency has done well in Australia and wants to go overseas to New York or London I would be talking to the communications industry – depending on what the business is of course,” he says.

“In New York we found there were a lot of incubator businesses going around visiting advertising agencies saying ‘Can you help us get started and we’ll give you a stake’.”

“I’d be talking to the media companies, because they know the consumers. I’d be talking to research companies, and ad agencies, too.”

“Not wasting their time, but if I had a great idea I’d be tapping into them and probably open up a couple of percent if they want a stake.”

“Not all agencies will do that, but some of the ones that want more interesting work will.”

So now he’s left New York and is preparing to start-up all over again, what was it like to leave behind the business he co-founded?

“It was quite emotional finally walking away,” he says.

“I think if you ask anyone about starting up, they’ll say the first couple of years are the best: you’re in it together, you’re getting going, starting your own shop, looking out for each other, and really enjoying it.”

And with plans for a new venture in front of him, what has Archibald learned about standing out from the pack?

After all, surely the last thing the world needs is yet another advertising agency?

“Ha! That’s an opening line of mine these days: ‘The last thing the world needs is another ad agency’.”

“To stand out you have to ask yourself the hard questions. You have to put yourself through the mill.”

“Go and talk to clients, I have constantly been talking to clients here; and I’ve always come back to Sydney every year, so I try to hit their perceptions head on.”

“I also listen to my friends in the industry who put my ideas through the wringer so that I can better answer the question ‘why you?’”

“I guess we’ll find out whether it’ll work over time.”

Archibald’s five start-up tips

1. Imagine the end

“It’s important. Especially for drawing up agreements on your partnership. From the day you start in a partnership you have to forecast the day you split.”

“Pretend you and your partners are falling out, how would it transpire? You have to be careful of that and you need a lawyer to look out for you.”

2. Trust your gut

“Gut instinct is the most underrated thing. After all, when you’re starting out that’s what you’re basing everything on.”

“That you’ve got the right idea and you believe in it.”

3. Get a financial director in early

“We’d have been better off if we’d got an FD in earlier.”

“We felt we could do it ourselves for a long time, but the agencies I most admire tend to have a great financial person at the heart.”

4. Hold on to naivety

“When I did my first start-up I was naïve, and naivety is a great thing. I never used to worry as much.”

“The younger you are, you think ‘so what’ when people tell you something might not be possible, simply because you believe it will happen. You have to have that belief.”

5. Be open with your partners

“We have a great relationship and are very fortunate that the three of us could always work it out over a couple of beers every time there was an issue.”

“That’s another key thing: you don’t have to be mates in business but you have to be able to be open with each other and talk stuff through with your partners.”

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